The Massachusetts job market showed modest improvement in September as employers increased hiring and the labor force expanded, while the unemployment rate remained steady, according to federal data released by the state on Friday.

Employers added 3,500 jobs last month, partially reversing a revised loss of 5,600 positions in August. Gains were concentrated in sectors that had previously contracted, including financial activities and professional and business services. However, employment declined in private education and health services, leisure and hospitality, and manufacturing.

The labor force—comprising individuals employed or actively seeking work—experienced its largest monthly growth in over two years, indicating increased confidence among workers about job availability. The state’s unemployment rate held at 4.3 percent, slightly above the national rate of 4.2 percent.

Massachusetts’ labor market has exhibited volatility throughout the year, with alternating months of job gains and losses. Despite the fluctuations, the report suggests gradual progress in employment figures.

This latest report arrives ahead of the upcoming gubernatorial election between Democratic incumbent Maura Healey and Republican challenger Mike Minogue. Minogue has been critical of Healey’s economic record, citing weak job growth and other challenges. Healey, meanwhile, credits Massachusetts’ economy for outperforming the nation in gross domestic product growth during the first half of the year and attributes the state’s high living costs to federal policies under former President Donald Trump.

A spokesperson for Healey emphasized the state’s economic strengths, noting that major companies such as Whoop, Hasbro, AstraZeneca, and Gillette continue to expand operations and create jobs in Massachusetts.

An analysis by the Massachusetts Taxpayers Foundation—a business-backed organization—placed the state near the bottom nationally in areas including private employment growth, cost of living, domestic out-migration, and energy costs. Conversely, the state ranked among the top three for economic output per capita, average weekly wages, venture capital investments, and fourth-grade reading and math scores.

Employment growth has been limited since Healey assumed office in January 2023, though over 16,000 jobs have been added since September 2025. The state’s unemployment rate averaged 3.5 percent during Healey’s first year, slightly below the national average of 3.6 percent, but increased to 4.5 percent this year compared with 4.2 percent nationally.

Wage growth in Massachusetts lagged behind the national pace for much of Healey’s term but has aligned more closely over the past year. Nonetheless, an economic activity index produced by the Federal Reserve Bank of Boston, which incorporates measures such as unemployment claims and new business applications, shows the state trailing national benchmarks during her administration.

Minogue criticized Healey’s record on Friday, stating, “Last in the nation in job growth. Last in the nation in permits per person. Second to last in the nation in debt per person. That is Maura Healey’s record, and today’s jobs report shows it getting worse.”

With the gubernatorial race tightening, how voters assess these competing economic narratives will likely influence the election outcome.